CDL Profit Falls 75% Despite Record-High Revenue

Singapore’s City Developments Ltd reported a 75.3 percent drop in attributable profit to S$317.3 million ($235.7 million) for 2023, even as the first-half completion of a residential project helped revenue reach an all-time high.

The profit plunge was due to higher financing costs and a lack of big divestment gains similar to those recorded the previous year, the property giant controlled by tycoon Kwek Leng Beng said Wednesday in a release. Excluding divestment gains and impairment losses, CDL would have seen an 89.6 percent increase in pre-tax profit on a like-for-like basis, it said.

Revenue jumped 50 percent last year to a record S$4.9 billion as property development revenue doubled. The surge was underpinned by the February completion of the fully sold Piermont Grand executive condominium, as an accounting quirk allows for recognition of revenue and profit in their entirety from newly completed ECs.

Revenue from investment properties climbed 31.8 percent by virtue of several new acquisitions, including the St Katharine Docks complex in central London and various living-sector assets overseas.

“The challenging market conditions last year presented us with attractive acquisition opportunities, enabling the group to significantly expand our portfolio and strengthen our growth prospects,” said CEO Sherman Kwek. “In 2023, we completed about S$2.4 billion of strategic investments to grow our development pipeline, enlarge our living sector portfolio, enhance our recurring income stream and expand our hospitality footprint.”

Disposal Shortage

SGX-listed CDL had received a boost in 2022 from large disposals like the KRW 1.1 trillion ($1.25 billion) sale of the Millennium Hilton Seoul and proceeds from the collective sales of Singapore’s Tanglin Shopping Centre and Golden Mile Complex.

The only substantial asset sale in 2023 was the $340 million divestment of a luxury residential site in Tokyo in a deal completed during the third quarter.

The hotel operations segment saw an 8.5 percent increase in revenue last year with growth in revenue per available room across all regions, CDL said. The key markets of Singapore and Britain reported RevPAR growth of 19.9 percent and 10.6 percent respectively, while RevPAR in the rest of Asia soared 77.2 percent, driven by China and Taiwan hotels.

At Singapore residential projects, CDL and its joint venture partners sold 730 units (including ECs) at a total sales value of S$1.5 billion, led by Tembusu Grand with 60 percent of its 638 units sold to date and The Myst with 51 percent of its 408 units already sold. Three other projects sold out during the year: the 188-unit Haus on Handy, the 592-unit Amber Park and the 407-unit Piccadilly Grand.

Project Pipeline

CDL last month launched Lumina Grand, a 512-unit executive condominium at Bukit Batok West Avenue 5. As the first and likely only EC launch in 2024, it was well received and has sold 55 percent of units to date, the developer said.

Two new residential projects are scheduled for launch in the second half of 2024: the 348-unit Champions Way in Woodlands and the 366-unit Union Square Residences on the former Central Square site at Clarke Quay.

CDL is monitoring market conditions to determine when to launch Newport Residences, a 246-unit ultra-luxury freehold project at the mixed-use Newport Plaza complex on Anson Road. Another pipeline development is the site at Lorong 1 Toa Payoh, which CDL and consortium partners clinched last November for S$968 million at a government land sale. With 777 units planned, the project will be the first new residential development in Toa Payoh in eight years.

“Though headwinds persist, we will embrace 2024 with cautious optimism, confident of our ability to navigate the changing landscape of the real estate sector,” said executive chairman Kwek Leng Beng.